U.S. to raise quotas for Russian raw steel

Producers will get $50 million sales boost

July 13, 2002|By BLOOMBERG NEWS

WASHINGTON - The United States will raise import quotas for Russian raw steel by 200,000 tons this year, positioning that nation's slab-steel producers to get a bigger market share than they had before tariffs were imposed in March.

The higher quota for slab steel, which is heated and rolled into finished steel, will mean $50 million in added sales for Russian steelmakers. It will help offset the estimated $500 million in sales that the Russian companies will lose with the tariffs on finished steel.

The Bush administration might also be trying to defuse a dispute with Russia over that country's refusal to import U.S. chicken parts, which is hurting sales of companies including Tyson Foods Inc. and Pilgrim's Pride Corp., analysts said.

"I thought something like this would happen because of all that trade-war talk over chicken," said Christopher Olin, a steel analyst at Cleveland-based Midwest Research Inc.

On Aug. 1, Russia will renew a ban on more than $600 million in imports of U.S. chicken because of what the government says are health concerns over how the chicken is processed.

That ban led U.S. Trade Representative Robert Zoellick to threaten to stall Russia's progress in gaining admission to the World Trade Organization, a top goal of President Vladimir V. Putin.

The decision to ease the effect of the tariffs that President Bush imposed to protect steelmakers such as U.S. Steel Corp. and Bethlehem Steel Corp. is part of a warming of relations between the former Cold War adversaries.

This year, the United States designated Russia a market economy, improving that country's chances of early membership in the WTO. It has begun purchasing Russian crude oil to secure alternative energy supplies and has joined NATO allies in agreeing to share intelligence and air defense with the former Communist power.

The increased quota for Russian slab, which is converted to finished steel products by U.S. rolling mills such as AK Steel Corp. and California Steel Industries Inc., also illustrates a continuing effort to improve commercial relations.

"We are pleased with the decision," said Yevgeniy Khorishko, a spokesman at the Russian Embassy in Washington. Still, he said, "we would like to see the U.S. remove its tariffs, which we believe are in violation of global trade rules."

Russia produces about 60 million tons of raw and finished steel a year.

Faryar Shirzad, a Commerce Department assistant secretary, said the decision was made to ensure that the U.S. rolling-mill industry has access to the raw material.

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